Research reports: The pen is mightier than the sword, but no match for a Hong Kong regulator

Writing research reports has come under the regulatory spotlight, with the Hong Kong Securities and Futures Commission (SFC), crossing swords with research analysts (the Moody’s case) and short-sellers (Mr. Left, the Citron case). In both cases, the SFC challenged the factual accuracy and conclusions of the reports, and also the methodologies used in their creation.

The consequences for both have been significant. Mr. Left was ordered to disgorge his profits and subsequently banned from trading securities in Hong Kong for 5 years, and Moody’s was publicly reprimanded and fined HK$11 million.